Incrementality

What You Need to Know

In marketing, ROAS (Return on Ad Spend), ROI (Return on Investment), and other measures related to one’s KPI’s (Key Performance Indicators) are traditionally viewed as effective ways to measure advertising success. There’s a good reason for that: they are! They’re fairly simple calculations to make (i.e. divide revenue by cost for ROAS), and provide necessary insights on a macro level.

But what if you want to measure individual ad campaigns or individual user groups or audiences to better allocate spending mix OR to understand how much better off you are by advertising? 

Opportunity: Welcome to Incrementality, a more precise view of the percentage lift of conversions that stem directly as a result of a particular ad or ad campaign. The best way to sum it up is this – Incremental lift analysis looks specifically at whether an individual advertising campaign was effective and how effective, by determining what sales revenue would have been without the ad campaign and comparing the two. 

Key Insights 

– What You Can Measure 

The answer is basically any performance-related metric including CPE (Cost per Engagement), CPA (Cost per Action), ROAS (Return on Ad Spend) and ROI (Return on Investment). You can apply incremental lift analysis to conversions, installs, in-App spend, and other variables. No matter what you measure, you can optimize your ad spend through this type of analysis by spending on campaigns that provide you the highest incremental gain. 

– Testing 

Testing is fairly straightforward, with a Test group and a Control group. Normally, a smaller percentage will be applied to the Control group with a larger share applied to the Test group for greater validity. The test group receives the ad; the control group does not. We measure what happens with the Control (no Ad) versus the Test (Ad) and look at the individual lift achieved through several variables including conversion rate, for instance. We can perform this series of tests over and over, across dozens of campaigns for dozens of variables. 

– Incrementality = “Because of…” The way to think about incrementality is the percentage lift of conversions (or other action) that occurred because of showing a specific Ad. That’s the key here: we’re able to measure what an advertiser would lose out on if the Ad weren’t shown. It provides validity to where and how you’re spending on advertising. 

If you’re an advertiser looking to optimize your Ad spending and allocate your budgets ideally, you really should be thinking about incrementality. Let us help you maximize your marketing spend and run a series of tests for you to help you better understand the true impact of your advertising efforts. Call or email us today!